Ather Energy IPO: Will the slow and steady builder outperform Ola on the markets

A little over a decade later, Ather Energy isn’t just selling electric scooters. It’s selling proof that innovation can be commercialised in India. But the road to that proof, from prototype to showroom, was a long one paved with struggles, and a whole lot of sheetmetal welding. From a hypothesis that fixing lithium-ion batteries could help solve a key limitation in electric scooters to actually launching one, Ather Energy’s journey was shaped by trial and error.

The Bengaluru-based electric vehicle (EV) startup opened its initial public offering (IPO) for subscription on 28 April, aiming to raise around ₹2,981 crore through a fresh issue and offer-for-sale mix. In the runup to the offer, the company had slashed its IPO valuation by 44% amid global market uncertainty and reduced investor share sales.

Despite reporting a net loss of ₹1,059.7 crore in FY24, the IPO concluded on 30 April with strong all-round participation—the retail quota was booked 1.78 times while the qualified institutional buyer portion was subscribed 1.70 times. Ather is set to list on 6 May.

The IPO represents more than a capital-raising exercise by Ather. It demonstrates that hardware-intensive and R&D-driven ventures can reach commercial viability and public markets in India, in an ecosystem dominated by software successes. The company’s origins at an academic campus, and its evolution into a manufacturing-intensive enterprise, highlight the potential for deep-tech innovation emerging from Indian institutions.

Mehta, who is chief executive of Ather Energy, said that the IPO marks a coming-of-age for the company. “You just kind of get a sense the business has matured and there’s a story that public markets can appreciate,” he told Mint.

Others agree. “Most Indian EV players are still assembling vehicles; very few are inventing,” said Suraj Ghosh, an automobile industry analyst, adding that by building its own stack, battery management, vehicle OS, and charging network, Ather is investing in long-term defensibility. “It’s India’s closest equivalent to a ‘Tesla-esque’ ethos in the two-wheeler domain, focused on control over software, hardware and even the charging infrastructure,” said Ghosh, who was previously director of mobility at S&P Global.

Ather’s IPO is also being seen as a bellwether moment for India’s deeptech startup ecosystem. A successful listing could serve as a signal to investors and policymakers alike that India is ready to support startups pursuing long-term and capital-intensive innovation, potentially opening doors for a new generation of founders building deeptech from first principles (fundamental concepts).

Unlike consumer apps that scale up quickly by using off-the-shelf tools, deeptech startups are built on significant scientific or engineering breakthroughs. They take on complex and long-term problems from first principles, often developing entirely new technology along the way. Ather Energy fits squarely in this category.

The EV market game

India’s two-wheeler market remains one of the largest in the world, with millions of vehicles sold annually, riding on strong demand in both urban and rural areas. Companies such as Ather Energy, Ola Electric and Hero Electric are competing with legacy auto companies for market share in this rapidly growing segment, while navigating the challenges of infrastructure development, battery technology and supply chain logistics.

In recent years, Ather Energy has solidified its position in the market, expanding its lineup with models such as the Ather 450X, 450S and the family-oriented Rizta, launched last year. The company has also established over 175 experience centres across 96 cities in India and developed Ather Grid, a proprietary fast-charging network with more than 1,000 charging points in over 80 cities.

In 2024, India’s electric vehicle market experienced significant growth, with total registrations reaching approximately 1.9 million units, a 19% increase over 2023.

While that rising tide has lifted all boats, in terms of market share, Ather has a long way to go. It still trails Ola Electric, which was the leader in the EV two-wheeler space till March, and TVS Motor, which pipped Bhavish Aggarwal’s beleaguered company to the top spot in April this year. In the nine months ending December 2024, Ola Electric held a 34.1% market share, followed by TVS Motor (19.4%) and Bajaj Auto (18.1%). Ather Energy was fourth with 10.7%.

Mehta says that Ather’s more mass-market product Rizta, launched last year, has gained retail momentum in states such as Gujarat and Telangana, pushing market share beyond the 20% mark in some areas.

This uptick reflects a broader shift in Indian consumer behaviour, Mehta argued, where rising aspirations are fuelling “a massive premiumization” in the two-wheeler segment.

“70% of Indian households already own a two-wheeler,” he said. “When they come back into the market, they’re looking to upgrade. The focus isn’t just on basic utility anymore. It’s on features, experience and value.”

How Ather did it

When Ather Energy set out to build an electric two-wheeler company, it didn’t have a playbook. But the company was able to put together a team of engineers who treated prototyping like second nature. A frugal but functional testing setup and a few lucky breaks worked in their favour, recalled Mehta.

“If you were to do this outside India, particularly in the US, starting salaries would be at least four times higher,” he said. This affordability made it possible to build deep in-house engineering muscle without burning through venture-sized budgets.

‘If you were to do this outside India, starting salaries would be at least four times higher.’

— Tarun Mehta

The company leaned heavily on the energy and knowledge of engineering students who had experience designing, building and racing their own vehicles in college. These weren’t just classroom engineers. The idea of working on a high-performance EV platform, while being paid to do what they loved in college, was an easy sell.

“These folks had good experience getting body panels done, working with fibre reinforced polymer, sheet metal, aluminum welding,” Mehta recalled. This community became Ather’s founding talent network.

The prototyping process was equally hands-on. “I knew this fabricator in Chennai, 30 kilometers away. I would take my bike in the morning with steel parts, go sit there the entire day and he would machine them out,” Mehta remembered. This kind of personal, on-ground involvement allowed Ather to iterate faster and stay frugal.

At a time when India lacked a mature EV ecosystem, Mehta and his cofounder and IITM batchmate Swapnil Jain saw the battery as a core constraint in EV adoption, which led them to build a scooter from scratch. With few local vendors and no existing template, they ended up designing most components in-house, often because there was no one else to do it.

They weren’t trained in structured hardware development. So, they figured it out by building prototypes and running long road tests.

Once the product came together, scaling up brought a new set of challenges. Used to solving engineering problems, Mehta and Jain initially tried to outsource manufacturing, assuming it would free them to focus on design.

“We looked everywhere to try and onboard a manufacturing partner to whom we could off-load the actual job of building vehicles (the Apple approach). It did not work. It never could,” Mehta wrote in a blog post, reflecting on what became a turning point in 2019.

Ather then decided to go for in-house production. In 2021, the company started a manufacturing facility in Hosur, Tamil Nadu, with an annual capacity of 110,000 scooters and 120,000 battery packs. That year, it reduced assembly costs and established more stable relationships with suppliers.

In the absence of a playbook or success story, the metrics of a hardware intensive startup, without hockey-stick revenue growth or a clear path to scale, didn’t make sense for traditional venture capitalists (VCs). Mehta counted this as a blessing in disguise.

“Deeptech doesn’t move at SaaS speed. And the only reason we got the time and space was because we were funded by people who weren’t asking those questions,” Mehta said. “We were never worried others would do it faster. Our biggest moat was very hard work. There’s a finite pool of people who can do it.”

Over the years, Ather Energy did manage to get some funding, raising approximately $450 million. Hero MotoCorp was its biggest backer, for a stake of approximately 40%. Other key investors include the National Investment and Infrastructure Fund (NIIF) with a 16.9% stake, and Singapore’s sovereign wealth fund GIC (through Caladium Investment) with 15.04%. Mehta and Jain each own 6.63% of the company. Early investor Sachin Bansal, who had invested nearly ₹400 crore in Ather since 2014, exited last June by selling his 7.5% stake to Hero MotoCorp (2.2%) and Zerodha co-founder Nikhil Kamath (5.3%).

But money alone isn’t enough for success, as the startup world will readily attest today. “Startups need nurturing, not just capital,” said Ashok Jhunjhunwala, president of IIT Madras Research Park, which incubated Ather. “Young founders need years of mentorship. Without that, easy money can do harm.” He cited Ather as a case study in perseverance.

“They didn’t take shortcuts. They designed, developed and built from scratch. That’s the kind of hard work we must value,” Jhunjhunwala said.

Innovating from within

Mehta’s ambition to build a world-class EV company is reflected in Ather’s engineering-first culture. Along with co-founder Jain, he has fostered an environment where engineers are encouraged to experiment, take ownership and innovate without fear—traits often missing in India’s assembly-focused manufacturing landscape.

This culture is also central to Ather’s global play. Competing beyond India requires not just good products, but defensible innovation, said Mehta. That’s why Ather has made intellectual property a strategic priority by filing patents across its battery management systems, vehicle OS and charging infrastructure to future-proof its platform in the global market.

Ather’s emphasis on patents is both bold and strategic, argued Ghosh. “In a world heading toward connected, updatable vehicles, owning IP is akin to owning future revenue. Indian startups rarely think this long-term, so Ather’s approach could become a case study if executed right,” he said.

The company established a ‘patent wall’, where employees could display their contributions, reinforcing that filing patents wasn’t a daunting task, but rather a natural part of the company culture.

“India is going to be the largest exporter of two-wheelers in the new world of electric two-wheelers,” said Mehta. “If you ever hope to become really dominant in industries with exports, you need your IP all around you.”

Faster or better?

One of the core challenges of building deep-tech innovation in India is the highly cost-conscious and tough-to-crack market. “Unlike Ola Electric’s blitz-scaling or TVS’s distribution might, Ather’s strength lies in building a high-trust, tech-savvy brand,” said Ghosh. The real question is whether India will reward engineering-first companies in the long run or continue chasing cost-first growth.

The company has earmarked the proceeds of the IPO primarily for capacity expansion, R&D and marketing, with one-third of the capital going toward expanding a new manufacturing facility in Aurangabad, Maharashtra, for future product lines.

One of the core challenges of building deep-tech innovation in India is the highly cost-conscious and tough-to-crack market. The real question is whether India will reward engineering-first companies in the long run.

Mehta said that the company has managed to carve out a meaningful revenue stream by selling its software as a one-time accessory, separate from the vehicle. “In FY25, year to date, 6% of our revenue came from software sales and that’s a 53% Ebitda margin product,” he said. Ebitda is earnings before interest, taxes, depreciation, and amortisation.

Despite concerns that the broader consumer base might not pay for add-on software, 86% of scooter buyers in FY25 opted in. According to Mehta, this strategy is rare in Indian auto markets and reflects the growing appetite for connected and intelligent vehicles.

While Ather owns almost none of its stores, it maintains tight control over the customer experience by insisting that franchise partners bundle retail and service at every location. “You can’t just take a storefront,” Mehta said. “You have to open service alongside sales, or it doesn’t work for us.”

This disciplined rollout model ensures that Ather’s quality ethos isn’t compromised, even as it gears up to expand from 260 to potentially thousands of touchpoints in the coming years.

In many ways then, Ather Energy’s journey offers a quiet counter to the idea that deeptech is impossible in India. Mehta and Jain have shown that it isn’t impossible. It’s just hard.